From: Reuters
Published March 17, 2008 10:13 AM

Railway group chief calls for end to rail VAT

AMSTERDAM (Reuters) - Value-added taxes on rail travel should be scrapped to encourage people to travel more by train, a step that will help fight global warming, the head of the Union of European Railway Industries (UNIFE) said on Monday.

"As long as rail passengers have to pay value-added tax for tickets and rail operators have to pay value-added tax for energy and even an eco-tax in some countries on electricity, we will continue to have a regulatory system that aims at encouraging passengers to avoid the train and to take the plane instead," UNIFE chairman Andre Navarri told an industry conference in Amsterdam.

The UNIFE represents some 60 European companies which design and make rail-transport systems and related equipments. Its members make up some 70 percent of the global production of rail equipment.

Navarri urged the European Commission to abolish these taxes from which planes are exempt.

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"If Europe really wants to meet its ambitious target to reduce CO2 emissions by 20 percent by 2020, the European Union needs to decide on a legal framework where the train is no longer punished with energy taxes and value-added taxes on tickets," he said.

Environmentalists say trains emit less climate-warming carbon dioxide and that planes are 10 times more damaging to the climate than trains.

A U.N. report last year said increasing use of cars and planes will push up greenhouse gas emissions in coming decades.

Navarri said the recently opened Madrid-Barcelona rail line will save 170 million tonnes of CO2 annually compared with the same journey by air or road.

(Reporting by Foo Yun Chee; Editing by Quentin Bryar)

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